Video: Budget cuts, transportation and the Academy Awards

MR. DAVID GREGORY: Good Sunday morning. Congress returns to work on Monday. And in five days, barring some sort of last-minute deal, 85 billion dollars in cuts will be hitting across-the-board slashing military and domestic programs and cutting some long-term unemployment benefits as well. All told, more than a million federal workers could be affected.

(Videotape)

PRESIDENT BARACK OBAMA: So, these cuts are not smart. They are not fair. They will hurt our economy. They will add hundreds of thousands of Americans to the unemployment roles. This is not an abstraction. People will lose their jobs.

(End videotape)

GREGORY: And as the White House warns of dire consequences, the sequester blame game has already started. Here with us, live this morning, the Secretary of Transportation Ray LaHood who sounded a pretty lard-- loud, rather, alarm bell on Friday. Mister Secretary, welcome. Good to have you here.

MR. RAY LAHOOD (Secretary of Transportation): Good morning.

GREGORY: You talked on Friday at the end of the week about a calamity in our air service system-- air service in America, a billion dollars in cuts that have to be made at the Department of Transportation, 600 million from the FAA. 47,000 FAA employees will need to be furloughed at least one day per pay period. Is it still going to be safe for the American public to fly if this sequester goes forward?

MR. LAHOOD: One thing we never compromise on is safety. We will never take a backseat to safety. Safety will not be compromised. But we will have to work with the airlines in slowing planes down. But there will be enough controllers to make sure planes are guided in and out of airports safely.

GREGORY: This is about aggravation. It’s not about safety.

MR. LAHOOD: Well, look, this-- this is a huge cut. It’s a billion dollars. It’s six-- 600 million at FAA, which has the largest number of employees at DOT. It’s about shared sacrifice. But this doesn’t have to happen, David. If Republicans and Democrats get together this week and take a look at the president’s plan, which he put on the table, to save 85 billion dollars, this does not have to happen. There is still time to reach a compromise.

GREGORY: Re-- realistically, do you see a compromise being reached here by the end of the week?

MR. LAHOOD: I hope so. I-- I do. It's been done before. It was done at the eleventh hour for-- to save the-- save us from going into the fiscal cliff. It can be done again and it can be done by Friday.

GREGORY: So by March 1st, does the traveling public experience what? Is it immediate, these disruptions, in the flying skies?

MR. LAHOOD: Well, we-- we-- we will begin to look at every contract at FAA. We will look at our opportunities to do what we have to do to come up with a billion dollars, and 600 million at FAA. And these things will begin to be phased in.

GREGORY: The other point to pin you down on, frankly, is security. It’s not just lines at the airport but safety when it comes to protecting the traveling public. Can you give assurances about that?

MR. LAHOOD: Well, look, TSA and Security Lines are under the jurisdiction of Janet Napo-- Napolitano at the Department of Homeland Security. But I-- I will say this. We-- we will never compromise on safety. People are going to be safe flying.

GREGORY: Here’s the reality. This is two percent of your budget. A billion dollars is a lot of money to anybody, right? But relative to the federal budget, it’s relatively small. Why, instead of worrying about dire consequences, aren’t you and your managers coming up with the best way to make these cuts that protect essential services?

MR. LAHOOD: Well, we are going to protect essential services and we’re going to look at all of our contracts. We’re going to look at all non-personnel items that we can. But-- but in the end, the largest amount of money is in the personnel area and our controllers represent 15,000 of the 47,000 people at FAA. And the-- the point is that the sequester doesn’t allow us to move money around. That’s the difference here. If we could shift money around, certainly we would do that. The-- these are very tough decisions. But they have to be made. But it can all be brought to a halt when the Congress comes back this week and Republicans and Democrats do what they’ve been able to do in the past--talk to one another, work with one another, compromise with the president who’s put a plan on the table.

GREGORY: But Republicans, your former colleagues, former Republican member of Congress are saying, wait a minute, Mister Secretary, this is a bit overblown. This is a transportation committee putting out a statement that reads in part, the following, "We’re disappointed by the administration creating alarm about sequestration’s impact on aviation, prematurely outlining the potential impacts before identifying other savings is not helpful. Today’s exaggerations are not backed up by any real financial data. The agency is well-positioned to absorb spending reductions without compromising the safety or efficiency of the National Airspace System.” They go on to point out that FAA alone has received significant funding increases in recent years. Over the last ten years the FAA’s annual budget has increased almost three billion or 41 percent. Do you really think Americans think that government can’t tighten up a bit, even if it’s a-- a pretty clumsy way of doing it with the sequester?

MR. LAHOOD: Look, this is not your father’s FAA. This is an FAA that has to meet certain contract obligations with our controllers. We know that air travel is-- is back at a par prior to 9/11. And we know that a lot of people are flying and-- and we’re not making this up, David. And we’re not making this up in order to put pain on the American people. We are required to cut a billion dollars, and-- and we’re going to do that unless Congress gets together and works together and compromises on this issue.

GREGORY: All right. So you talked about being an Illinois guy. You talked about Lincoln this week as you issued a challenge to Republicans. This is what you said.

MR. LAHOOD: I suggest that my former colleagues on the Republican side go see the movie Lincoln. Because in the movie Lincoln it shows how hard it was back then to get things done. But what Lincoln did is he gathered people around him the way that I believe President Obama is doing by calling Republicans, talking to them, trying to work with them. And when that happens, big things get solved.

(End videotape)

GREGORY: Mister Secretary, the president is not exactly rallying Republicans and Democrats together. What he’s doing is, and you’re part of this, is waging a public relations war, going right to the public and saying, look, public opinion is on my side. And these Republicans are to blame for not getting anything done here. Now to be fair to the president, John Boehner said he’s not going to negotiate directly with the president either. But there could be a little Lincoln on both sides here, no?

MR. LAHOOD: I predict it’s going to be the best picture tonight. I know you don’t want my prediction, save that for later. Look, the president has put a plan on the table to-- to-- to save the 85 billion dollars. The president has made phone calls to the Republican leaders…

GREGORY: The-- the House passed a version of it too.

MR. LAHOOD: …in the House and in the Senate.

GREGORY: But the House passed legislations too to solve this.

MR. LAHOOD: The idea the president hasn’t reached out is just not true, it’s not factual. He’s reached out. He’s talked to Republican leaders. He’s put a plan on the table. Now it’s the Congress’s opportunity this week, as they come back from listening to their constituents about all the hurt that’s going to be taking place in the country as a result of this sequester. I believe these members of Congress will push their leaders to say let’s fix this before Friday.

GREGORY: And fair enough. But as the chief executive, does the president have a unique responsibility to do something to break this impasse even if he feels he’s absolutely right and he doesn’t have a good negotiating partner?

MR. LAHOOD: I think he’s done that. He’s made phone calls to Republican leaders. He’s put a plan on the table and he’s ready, willing, and able to do what he can to work with people this week to make it happen.

GREGORY: Isn’t it realistic to say that there’s not going to be meaningful debt reduction this year under these circumstances?

MR. LAHOOD: Well, look, everybody is in favor of debt reduction. Everybody is in-- in favor of getting us to the point where we’re really making progress. And I think-- I think it will happen. I really do.

GREGORY: Do you think it will happen this year?

MR. LAHOOD: I’m optimistic about this.

GREGORY: All right. Mister Secretary, thank you very much.

MR. LAHOOD: Thank you, David.

GREGORY: And coming up later in the program our political roundtable. Well, full analysis of the political fallout from the sequester debate and how it could affect the economy and the markets. But first, the nation’s governors are meeting this weekend here in Washington. And we have two of them meeting here this morning for a debate. The Chairman of the Republican Governors Association, Louisiana’s Bobby Jindal and Democratic Governor of Massachusetts, Deval Patrick. And how are the states taking on the big issues that Washington is debating? From the budget to gun control, health care and abortion. And Governor Jindal, Governor Patrick, welcome back to MEET THE PRESS.

GREGORY: Good to see both of you. Look, this is immediate impact, Governor Jindal. Here is the-- the front page of the American Press, newspaper from Lake Charles, Louisiana, your home state just yesterday showing that local air traffic control is on the funding block with this sequestration. And you heard the secretary say this is real disruption because they got to cut a billion dollars.

GOV. JINDAL: You know, the president, and you heard right, compared the president to Lincoln. We need real presidential leadership here. The president needs to get-- stand up to the plate. If he really thinks this is going to devastate the military, really think this is going to devastate air traffic control, really devastate meat inspections, and they have rolled out this great political theater about how cutting less than three percent of the federal budget is going to cause all these awful consequences, here is his chance to say, here is how we can do it better. The reality is the federal budget this year even after the cuts will still be larger than last year’s budget. Bob Woodward has got a great piece where he-- he tells the president, basically-- he doesn’t use these words. But he basically says the president has amnesia about this. The president proposes sequester, he signed this in a law and now he doesn’t want to make these cuts. The reality is nobody is saying he should make these exact cuts, but we can cut less than three percent in the budget without hollowing out our military, without jeopardizing air traffic, without jeopardizing meat inspections. It’s ridiculous...

GREGORY: All right. So you’re saying the folks in your state who are reading that headline, they can solve this?

GOV. JINDAL: Absolutely. Look, governors solve this. Families out there, businesses during this national recession have had to tighten their belts do more or less. We’re talking less than three percent. We’re talking about a federal budget that’s still going to grow. Let’s be clear about this. Only in Washington, D.C. is at a cut. You ask any American out there. Is there at least three percent of the federal budget that is being wasted today? In the Department of Transportation’s budget, members of Congress point out hundreds of millions of dollars spent on consulting contracts, on travel. Let’s not cut the air traffic controllers first, let’s go cut the waste. One thing that Ray said that I do agree with, let’s give them the ability to shift those dollars and make some real priorities and make some real smart spending cuts, don’t do it with an axe or with the scalpel but the president needs to step up to the play and say to Congress here’s how you cut 85 billion dollars, I’ve got an idea for them.

GREGORY: Right. But he-- but he has-- he has said it, just Congress doesn’t want to raise-- doesn’t want to raise the revenues.

GOV. JINDAL: Just delay the Medicaid expansions, delay the health care exchanges so they can work with states on waivers, on flexibility. You could save tens of billions of dollars there by-- and you’re not even cutting a program that’s started yet, just delay for a few years.

GREGORY: All right. Governor Patrick, I’m looking at our-- our sheet here. More than 60 thousand cuts both Department of Defense and non-Department of Defense in your state alone.

GOV. PATRICK: Right. This is all about growth and it’s always been about growth from the president’s perspective and it ought to be about growth from the American people’s perspective and all of our-- from all of our point of view. And-- and government has a role to play in that. The president understands that. You know, I’ve listened to my good friend here, Governor Jindal, who has talked about-- about these issues as if they are budget issues alone. We’ve actually seen some two and a half trillion dollars of budget cuts from this president. And the only plan on the table right now to avoid sequester is the president’s plan. So this notion about not having leadership, this is about leadership and the president has shown that a-- a balanced approach, which is about cuts and closing loopholes, that enables us to invest in the things that grow jobs is more import-- important and appropriate for us at this point.

GREGORY: Look at the polling, Governor Jindal. I mean, the White House point is, look, the president campaigned on his theory of the case for economic growth, for fiscal balance. It included more revenues, some of which came as a result of the fiscal cliff fight. But now he’s talking about closing additional loopholes. And, look, John Boehner himself, the speaker of the House…

GOV. PATRICK: That’s right.

GREGORY: …said this would hurt national security to let the sequester go forward. So why not agree to some more revenues to go along with cuts?

GOV. JINDAL: Well, three things. One, we are for growth. We’re for growing the American economy, not the government economy. You’ve seen the greed of Wall Street being replaced to the greed of Washington, DC. There’s never enough revenues, never enough taxes for this administration. I agree with my friend. We should be about growing the private sector economy, real jobs out there. Look, nobody is saying that we should do the cuts this way but we’re saying in 2011 this president also campaigned on a commitment he made. He made it to Congress, he proposed a law, he signed in a law saying he didn’t want to have the-- the deficit fight, he didn’t want to have the budget ceiling fight in 2012 when he was campaigning. So he said, in exchange-- in exchange for that-- that raising the ceiling, he proposed he signed in this law, this 85 billion dollar cut. He already has over 600 billion dollars in new revenues. He’s already had over 600 billion dollars in increased spending. We are for a balanced approach. We’ve had-- we’ve had more than enough new revenues, we’ve had more than enough growth in government spending. Now is the time to start shrinking our spending so we can grow the private sector economy, not the government.

GOV. PATRICK: David…

GREGORY: Yeah.

GOV. PATRICK: …first of all, this isn’t about whether there are or not going to be cuts. The president’s plan has cuts. In fact, to some extent deeper cuts than the sequester provides. It also has the closing of loopholes, some of the same loopholes that Speaker Boehner favored only a little while ago. And what we’ve seen is more of the same, the congressional Republicans move the goal post as soon as the president comes their way. He’s got a plan on the-- on the table that has an awful lot of things they say they support, put it to a vote because with Democrats and moderate Republicans, it will pass and it will be good for the economy.

GREGORY: You know, there’s a broader question here about leadership of executives and you’re both executives. How tough is it in a second term? How are those challenges different as you move forward and you have a little bit more experience behind you, Governor?

GOV. JINDAL: Well, look, I would recommend-- my recommendation to the president is it’s time to stop campaigning, it is time to actually do the job here in Washington, DC. In our second term, for example, last year we passed one of the most sweeping educational reform laws in the country giving real choice to our-- our kids, putting great teachers in the classroom, we’re forming our tenure laws, letting the dollars (Unintelligible). This year, like my colleague, we’re proposing tax-- significant tax reform. We’ve got different ideas about that. We’re trying to get rid of the income tax in Louisiana. My advice to the president is stop the campaigning, stop sending out your cabinet secretaries to scare the American people. Roll up your sleeves and do the hard work of governing. I’m foreclosing those loopholes by the way. Let’s use those revenues to lower tax rates so we can grow the economy so we don’t the world’s highest corporate income tax rates. So we put more money in the private sector economy. Now Walmart and other companies are saying thanks for the tax increases. They’re actually seeing business slow down. We don’t need more taxes. We need more private sector growth, not government growth.

GREGORY: Peggy Noonan was on the program, Governor Patrick, in-- in her column yesterday said with the president it’s always government by freak out. Does she have a point about that? She says, “It’s always cliffs, ceilings and looming catastrophes with Barack Obama, always government by freak out. That’s what’s happening now with the daily sequester warnings. Seven hundred thousand children will be dropped from Head Start, 600,000 women and children will be dropped from aid programs. Meat won’t be inspected. Seven thousand TSA workers will be laid off. Customs workers too, air traffic controllers. Mister Obama has finally hit on his own version of national unity, everyone gets scared together.”

GOV. PATRICK: She-- no one turns a phrase like Peggy Noonan. But, look, this is not of the president’s creation. You know this president didn’t campaign and hasn’t wanted to govern by constantly being in conflict with-- with congressional Republicans. But from the very beginning, remember, it was a leadership on-- of the Republicans and the Senate who said that their number one agenda was to make this president a one-term president. And having won a second term, their number one agenda is to slow down the recovery of our economy. And that needs to be called out. It is a fact that sequester is going to have an impact, particularly on education in our state and I think also in-- in Loui-- Louisiana. It’s going to have an impact on innovation investments. It’s going to have an impact on infrastructure investments. And those three things have been the formula for our growing in Massachusetts faster than the national growth rate, and coming out of recession faster than most other states. It’s a winning formula for the nation as well. And we cannot slow that down.

GREGORY: Just one thing for the record, as I think the White House stipulates it was the president’s idea, the sequester formulation, and of course, Republicans agreed to it, a 174 agreeing to it. But let me move on to a couple of other areas. Some big issues that states are debating…

GOV. PATRICK: Yeah.

GREGORY: …that-- that of course, Washington is debating. And I-- I want to start on the issue of Obamacare. Governor Jindal, you seem to be bucking the trend among Republicans. A lot of Republican governors are saying, you know what, we’re going to go with what the White House wants, we’re going to expand our Medicaid rules, which is our option under the health care plan. We’ll have to pay some upfront money but the federal government will pay more of it. And you’re saying, no, I’m not going to do that. Other Republicans are saying yes, that you should. What do you know that they don’t know?

GOV. JINDAL: Well, David, I’d say a couple of things. One I think, every governor needs to make the decision that’s best for their state. For Louisiana, this will cost us-- Louisiana taxpayers over a billion dollars over the next 10 years. I actually agree with what the president said in 2009. He said it doesn’t make sense to simply put more people in to the Medicaid program without reforming this program. He was right in 2009. They’ve not reformed the program. We’ve offered multiple-- multiple times to meet with the president. We’ve offered specific suggestions to give states a-- a flexibility on eligibility, on benefit design, on premium assistance, what’s not a one size fits all approach. In Louisiana alone, as many as 180 thousand people would be moved from private insurance to Medicaid under this expansion. That doesn’t make sense. It-- it is not effective outcomes. It is not an efficient program. We’ve offered to meet with the president. He’s yet to respond to us. I-- I think there are actually opportunities on a bipartisan basis to reform this program for those governors that are expanding as well as those governors that are not expanding. I don’t think-- look, I-- I do believe everybody in America should have access to affordable health care. But I agree with what the president said in 2009. It doesn’t make sense to put more people into this program without expanding it-- without reforming it.

GREGORY: Governor Patrick.

GOV. PATRICK: Well, you know, of course, national health care reform is based on our own experiment. Massachusetts has been wildly successful. Over 98 percent of our residents have access to affordable health care today; 99.3 percent, I think, it is of children. I don’t think any other state in America can touch that. There are more businesses offering insurance to their employees today than before health care reform went into-- to effect. It has not broken our budget and it’s very, very popular. And we have found a tremendous amount of flexibility with this administration and actually with the Bush administration before them in implementing this. So I-- you know, I-- I understand that there are philosophical reasons for-- for not supporting this president’s solution. But rather than having the usual choices, which was between a perfect solution and no solution, we tried something in this country. And I-- I congratulate the president.

GREGORY: Take something like gun control. I mean it looks like there may be some movement towards universal background checks. But you see New York and Connecticut kind of pursuing their own approach. Are states going to go about this differently or are a lot of states, particularly with more pro gun rights supporters, not going to do anything and let-- let Washington have its own battle.

GOV. JINDAL: Look, we’ve proposed legislation in Louisiana, our session starts in April. I’ve proposed legislation. I think there’s an opportunity to do something here. If we’re-- if we’re serious about doing something and not just having a political football here, I think we can work with Democrats, we can work even with the administration and say I think we all agree that we-- we shouldn’t have guns get in the hands of those with serious mental illnesses. We’ve proposed legislation to provide more of that information, more of those records into the background check system that is happening today. Let’s fix the current background system. I think there’s actually some things-- now, if the president wants to get something done, that’s what we can do. If, however, there are areas where there are agreement, if, however, he just wants a political football, we could just have a debate…

GREGORY: Well, are you going to have a patchwork of laws? Is that the (cross talk)…

GOV. PATRICK: I hope not. I hope not. I think we can agree on a-- on a more rigorous background check system. In fact, we can have this rigorous set of laws in our own home state as possible but if you can buy guns in bulk right acro-- right over the state line and walk them in, it doesn’t really help. So there are some solutions that have to be national in nature.

GREGORY: The-- the tax debate is interesting. Here’s a couple of headlines that capture different approaches that you have in your respective states. In The Boston Globe, Patrick would hike one tax cut, another seeks to raise almost two billion by increasing levies on income while lowering them on sales. The Times-Picayune headline, Governor Jindal calls for elimination of all Louisiana income and corporate taxes, you-- you want to raise the sales tax which could-- critics say hurt a lot more average Louisianans. And it-- doesn’t it come down to in some ways, where would you rather live?

GOV. PATRICK: Well, we were-- we were just talking about.

GREGORY: Okay. Right and there’s-- there’s lots of reason-- lots of elements to that debate. But here are some statistics state to state, Massachusetts to Louisiana that reflect kind of more services, less taxes and different results. Let’s put that up there. You have a bigger population in Massachusetts. You see that there. The high school graduation rate much higher in Massachusetts. The median income about 20,000 higher, percentage of population without health care insurance much higher. Louisiana, the percentage of population on food stamps much higher in Louisiana. So does this-- do results break a little bit along some of the ideological and philosophical lines about taxes and the amount of government services?

GOV. JINDAL: Well, David, I would actually say look at how far Louisiana has come. We’re actually a top ten state when it comes to private sector job creation, unemployment rate five and a half percent lower than in Massachusetts. You look, in-- in Louisiana we’re actually-- our per capita income is now-- our average per capita income has risen despite the national recession, highest ranking in-- in 80 years. We talked about children’s uninsured rate, 96.5 percent of our children have insurance. You look at the charter schools in New Orleans, doubling the percentage of kids on grade level in reading and math in the last five years. After 25 years of losing our people, last five years in a row, we’ve had more people move into the state rather than leave the state, one of the few states that is-- that is actually gaining jobs despite the national-- slow national recovery. So when you look at the movement and progress, I think you’re seeing tremendous growth in Louisiana. When it comes to taxes, we actually have proposed a-- a tax reform that will protect our low middle income families, allow our economies to grow or allow our economy to grow more quickly. What you’re seeing is those states without an income tax actually do better in terms of economic growth. It really comes back to. If you want to encourage investment and growth, stop taxing it, stop discouraging it. I think we’ll actually see higher-- higher income-- a higher income, higher job creation, more economic growth as a result of getting rid of the income tax.

GOV. PATRICK: It helps to have oil and gas, too…

GOV. JINDAL: It doesn’t hurt.

GOV. PATRICK: …which we don’t have at home. I mean it is-- it is always about what kind of community, what kind of commonwealth, or state or country we want to live in. And we very much believe that at a time when the whole world economy is involved in a knowledge explosion we have to invest in education. I’m proud of what we’ve done there and the fact that we’re number one in the nation in student achievement. It is true that we are about a point higher in unemployment than-- than Louisiana but we’re-- our GDP is growing four times the rate of Louisiana, so we’ll catch-- catch up them-- with them pretty-- pretty quickly. And we’ve a proven strategy of investing in education, in innovation and in infrastructure. And that’s why we’ve come out of recession faster than most other-- most other states. I think that’s the strategy, by the way, that works for this nation and has worked historically. And it doesn’t mean, you know, that we get stuck on issues about the size of government being small, the question is what do we want government to do. And what are the things that we-- that all of us have a stake in. And I think growing opportunity, we all have a stake in. We’ve got a winning strategy for that.

GREGORY: All right. Before you both go out, I want to pin you down Governor Jindal on politics. To all of us who cover these matters it appears that you’re positioning yourself for a presidential run. And one level of criticism has come from the Plum Line blog in The Washington Post that sites your support for sales tax-- vouchers, reduction in Medicaid expansion and says the following. Bobby Jindal’s rise shows the GOP reform is all cosmetic. The blog write, “Republican reform will remain cosmetic. The GOP will have impressive diversity on the candidate level, and the same commitments to right-wing policies that has defined the party for the last four years.” Is that unfair in your judgment?

GOV. JINDAL: A couple of things. One, nobody in the Republican Party should be thinking about running for president. We’ve got to win the debate before we can win elections. When you look at the policies, if you want to call them right-wing, I think these are good policies for Louisiana, good for America. Every child should get a great K-12 education, dollars for every child, great teachers in every classroom. If that’s right-wing, then absolutely. I believe we should get rid of all the exemptions, loopholes, and the tax code; 468 exemptions, Louisiana’s tax code. It should be simpler, easier to fill out your tax form, so the government is not distorting your behavior. That’s right-wing guilty. And third and finally to your earlier question, look, government cannot be the answer to all of our problems. This administration has pursued philosophies and policies. We’ve grown government to historic levels. Six years in a row, next year the proj-- this year projecting six years in a row of unemployment above seven and a half percent. We’ve tried this path. It doesn’t work. We’re offering a Republican Party a different solution, which is about growth, not austerity, it’s not being the party of big government, big Wall Street, big banks. I think that’s the way we win the argument, that’s the way we win the elections.

GREGORY: Jon Huntsman says that it’s truly conservative to allow gays and lesbians to marry. Is that a change you could support?

GOV. JINDAL: Look, I-- I believe in the traditional definition of marriage. Let’s speak there what happened this last election, that we had election that was dominated by economic issues, unemployment higher than when the president started at-- right after the election came out. We still lost an election where majority of the American people said we want-- we think the federal government is doing too much. We lost that election because we didn’t present a vision showing how we believe the entire economy can grow, how people can join the middle class. We’re an aspirational party and we need policies that-- that are consistent with that aspiration…

GREGORY: All right. Yeah, the debate is going to continue. Governor Jindal, Governor Patrick, always happy to have you. Thank you very much.

GOV. PATRICK: Thank you.

GOV. JINDAL: Thank you.

GREGORY: We’ve got more here, a lot more, as the back and forth about who is to blame for this budget mess that we’re in--is taking off. Our political roundtable is here to break down the politics behind all the finger pointing. Joining me, the host of NPR’s Morning Edition, Steve Inskeep; Wall Street Journal columnist, Peggy Noonan; former Democratic Congressman, Harold Ford. Plus, what do cuts mean for the economy. And your bottom line, the CNBC dynamic duo is here as well, Jim Cramer and Maria Bartiromo. All coming up, our political roundtable right after this.

GREGORY: Coming up, what are the economic consequences of Washington’s dysfunction? Our roundtable is here and ready to weigh in. It’s coming up after this break.

(Announcements)

GREGORY: The debate continues. We’ve got our political roundtable here for insights and analysis. Joining me columnist for The Wall Street Journal Peggy Noonan, the aforementioned; former Congressman Harold Ford Jr.; host of NPR’s Morning Edition, Steve Inskeep, just close your eyes and when he talks, we’ll know exactly who he is. Anchor of CNBC’s Closing Bell and On the Money, Maria Bartiromo and host of CNBC’s Mad Money Jim Cramer. Welcome to all of you. So much to sink our teeth into. You heard Bobby Jindal say, Governor of Louisiana, to the president’s stop sending your cabinet secretaries out to scare people. Here was the headline in-- in the National Journal this week from Ron Fournier. He writes, “You may be right Mister President, but this is crazy. As the nation’s chief executive, Obama is ultimately accountable for the budget fiasco, even if he is right on the merits and the politics,” and yet the president is out in his radio address saying, no, the blame is actually with Republicans. This is what he said.

(Videotape, Yesterday)

PRESIDENT BARACK OBAMA: Unfortunately, it appears that Republicans and Congress have decided that instead of compromising, instead of asking anything of the wealthiest Americans, they’d rather let these cuts fall squarely on the middle class.

(End videotape)

GREGORY: Wow. A back and forth. This is blame game in Washington, Peggy.

MS. PEGGY NOONAN (Columnist, The Wall Street Journal): It is. And I’m not sure long-term this does anybody any good, this crisis. I think the president really has failed. I’m sure Harold you’ll disagree with me, but he has failed to establishment-- establish himself as a leader in this particular crisis, in the sequester thing. I just have a bad feeling about going out and trying to scare the American people right in the middle of the great recession when everybody is nervous enough. So, I-- I don’t think it’s a good thing and I think the way he’s talking about Republicans, such as to Al Sharpton this week saying all they believe in essentially is-- is protecting tax cuts for the rich, that’s not a language that will get anybody into a discussion or at a bargain table.

GREGORY: Right, but Maria, it did get the American people into a discussion. I mean, the White House says, look, he campaigned on this theory of the case, on fiscal matters, on the economy generally. And it would be an abdication of leadership at some level if he just sort of caved on this up instead of really jamming it to Republicans who say, no, you know, we’re done-- we’re done on revenues. We-- we-- we prevented the tax cuts from, you know, going up or, you know, taxes from going up in December. We’re not doing anymore.

MS. MARIA BARTIROMO (Anchor, CNBC’s Closing Bell/Anchor, CNBC’s On the Money): Yeah, but I think at this moment in time as we live from cliff to cliff, we do need leadership in terms of bringing the two sides together. I mean, I think that’s what the public wants from an economic standpoint. 85 billion dollars is not really going to do much in terms of impact. I think Wall Street is seeing this as scare tactics because if the market really believe that the economy was going to be paralyzed on March 1st, we would not be-- trading near record highs, and that’s exactly where we are right now. Nobody likes the sequester. For me, it’s more of a national security issue than an economic issue because they’re so blunt, these cuts in defense, as well as discretion, and nobody even knows what missions are going to be impacted.

MS. BARTIROMO: So, from that standpoint, it is something to be said about national security, but from an economic standpoint, I think Wall Street business has been anticipating this. This is not going to be a shocker. And it certainly is not going to have tremendous impact in terms of broad economic growth.

GREGORY: What-- what else should the president or could the president be doing, Steve…

MR. STEVE INSKEEP (Host, NPR’s Morning Edition): Well, the-- the economy is likely going to be okay. The long-term indicators seem to be moving in the right direction. The president has really added some drama here, hasn’t he? It’s a little hard to believe that if you’re making this cut, a seven percent cut or eight percent cut in the Pentagon that the first thing that you must do-- the first thing that you must do is pull back an aircraft carrier from the Persian Gulf. Really, it’s the first thing. But with that said, when you begin looking at the numbers and the difficulty of cutting, you realize you can’t furlough armed-- you can’t furlough uniform military personnel. You’re going to end up furloughing a lot more civilians. You can’t make certain cuts and so they become more drastic. In this situation, the thing that-- that the White House could have done that Congress could have done was think a little more long-term. They have multiple deadlines, as we all know. And what people in Congress have been talking about is how to combine them. How do you combine the sequester with the budget battle that’s coming up, with the debt ceiling fight that’s going to come back again.

GREGORY: Right.

MR. INSKEEP: How do you add a couple of those together so that you come up with a larger deal and that’s what’s been…

GREGORY: Harold, the Washington dimension of this is pretty striking, too, because now this morning, you’ve got Bob Woodward of The Washington Post taking on the White House saying that the president is moving the goalpost by insisting on tax revenues being in there. Let me read a portion of what’s in his-- his opinion piece this morning. “The final deal reached between Vice President Biden and Senate Majority (sic) Leader Mitch McConnell in 2011 included an agreement that there would be no tax increases in the sequester in exchange for what the president was insisting on: an agreement that the nation’s debt ceiling would be increased for 18 months, so Obama would not have to go through another such negotiation in 2012 when he was run for re-election. So when the president asks that a substitute for sequester include not just spending cuts, but also new revenue, he is moving the goal posts. His call for a balanced approach is reasonable and he makes a strong case that those in the top income brackets could and should pay more. But that was not the deal he made.” Just to point this out, the White House is adamant that that is not accurate. That they-- they’ve always pushed for additional revenues to-- to be part of any deal on avoiding these spending cuts. But what does all this say to you?

FMR. REP. HAROLD FORD JR. (D-TN): I’ll let Bob Woodward in the White House litigate who’s right on that matter, but disappointment abound, I would probably agree a little more with Peggy than she suspects. There’s no doubt there’s a leadership void. The country, the business community, pedestrians, working people can’t survive and live and flourish if we operate our government at the federal level month by month, three-- quarter by quarter round clips. The reality is you have 9.4 percent in automatic cuts in defense if this sequester goes through, about eight and a quarter to discretionary spending. I’ve heard the president and my friends in-- in Congress and my friends in administration say that they wish they had a-- a scalpel which they could move things around but they don’t. The thing that’s most frustrating to me and I-- I heard Maria’s points and I thought she did some great interviews this week with-- with a few people--Druckenmiller and Canada to be exact and Kevin Warsh who I think wrote a great piece about how to balance this thing, is that there’s no talk about growth or to the extent we should be talking about. Why not approve the keystone pipeline. You talk about new tax revenue the states in this country would benefit. You have 10 to 12 stakes right away--water, sewer, education projects with new tax revenue. Why not in-- why not go forward with allowing natural gas to be exported. The Department of Energy has already said it’s okay. We would reduce our trade deficit. We create jobs here in the country. Why not give broadband community some certainty around new regulations or a lack of new regulations, almost one and a half trillion dollars of new investment over the last ten years. I just wish that we talk a little more about that. And Peggy, I would agree with you probably a little more than you think about just the disappointment. I come back to the original point. No one, Democrat or Republican, can be pleased with the way their parties are behaving. Perhaps extreme partisans can. But those of us who want government to work, believe it can work, actually work there when it did or disappoint.

GREGORY: But here is the thing Jim Cramer, you know, the White House will say this is not a pox on both their houses. This is a president who has made some real suggestion and that Republicans will not provide any more tax increases, period. They can’t get it passed. They're adamant about that even though the president campaigned on it. And what they have only rescinded something like 18 percent of the Bush tax cuts. So there is more room to go. What am I missing here?

MR. JIM CRAMER: I don’t think you’re missing much. I do think that the stock market itself is saying this isn’t going to happen. The defense index on Wednesday, it is all-time high. That says sequestration will not happen. The fact that the stock market is doing well despite the fact the gasoline prices are much higher, that’s hurting the consumer, payroll tax holiday goes away, that’s hurting the consumer. Again says that maybe something is not-- not drastic. Nothing drastic will come of this. Even despite the scare-- scare tactics, government by freak out. How right is that? I still feel pretty good.

GREGORY: I mean, coming back Harold and Peggy to Medicare Reform. Because that’s a real big issue. I mean, the president has-- he’s got some Medicare reforms or cuts in there, he doesn’t want to raise the retirement age. In the past, he’s-- he’s sided with what they called chained CPI, which is you reduce benefits. Doesn’t want to means test. That’s what Republicans want, but I think the feeling is in the White House, why are we going to give on this now? If we do this now, we’re not going to get tax reform, not going to get other thing.

MS. NOONAN: The White House should be thinking big. In a funny way, you know, we’re doing all this small scare stuff; we’ll lose FAA guys, all of that stuff. Look, everybody knows that a rough path to stability is this. You try to get your hands around and control the growth in entitlement spending. You take a look at our tax-- our tax code, which is kind of an incoherent pigsty that goes thousands of pages. You make it more rational. You make it something that is understandable to people and more allowing of growth. That will help create an air of stability that will actually allow growth to begin. So I don’t think this is really all very mysterious. And-- and I feel like the White House and the Hill are caught in this stupid, childish thing.

GREGORY: Right. Steve, you want to get on it. Go ahead.

Mr. INSKEEP: Well, the White House would argue that they are trying to think big and that they keep going for a grand bargain and not getting there. I think it’s interesting that Republicans, particularly House Republicans, when I talk to some leading members of that party, are willing to bring in greater revenues. But they want to do it in a way that they don’t have to call it a tax cut. They are willing to do tax reform…

REP. FORD: One of the challenges is the president and the Republicans, why isn’t anyone talking about raising carried interest? Why isn’t anyone talking about what the president talked about before capping deductions to 28 percent for charitable and mortgage. I’m most frustrated that there are not specifics on the table. I was with (Unintelligible) the other day. He says we could agree to all of these things. The problem is you got to have a vessel, you got to have the leadership vehicles, lay this out for people to rally around. That’s what I find most frustrating.

GREGORY: Right.

MR. CRAMER: The carried interest is…

MS. NOONAN: And not have private conversations, too.

GREGORY: Well, explain what carried interest is.

MR. CRAMER: Okay. There's two guys George Roberts and Henry Kravis, great guys, okay. Each made 137 million dollars. We just discovered this year. Now, they paid a much lower capital gains rate on a lot of that. Everybody who’s watching this show, except for hedge fund managers--I was a hedge fund manager--pays ordinary income, much, much higher. This is the only tax on the (Unintelligible) because I think we should have no more taxes. We just did a huge amount of taxes but this particular one that you mentioned. It’s going to raise a lot more money than people realize. There are a lot of people who transfer ordinary income in the capital gains.

MR. INSKEEP: But it’s a fairness issue, too.

MS. BARTIROMO: Yes, it is. People do change the revenue, change their income to capital gains versus ordinary income and pay much lower-- lower tax. One thing that I don’t think-- I-- I don’t think we’re talking about very much is the fact that the interest payments on the debt are going to skyrocket once rates become normalized once again.

MS. BARTIROMO: I mean, you know, Stanley Druckenmiller, the former hedge fund manager who came on the show who you referred to a moment ago, was talking about the fact that rates right now are making everything look totally manipulated because they’re at such record low rates.

REP. FORD: Right.

MS. BARTIROMO: But once rates normalize again, we’re talking about 500 billion dollars in just interest payments for the United States to actually finance the debt. That’s going to make 85 billion dollars look like a drop in the bucket.

GREGORY: So one of the…

(Cross talk)

REP. FORD: Every time when the rates go back up, we get 500 billion dollars...

MS. BARTIROMO: It’s about the bond market. You know, the bond market is a funny thing…

GREGORY: Right.

MS. BARTIROMO: …because so far the markets have not really been reacting to any of this but at some point...

GREGORY: The bond markets really haven’t been reacting to all of this.

MS. BARTIROMO: …the bond market has but at some point, the bond market is a funny thing, interest rates skyrocket.

GREGORY: But hasn’t this warning been out there for a long time that…

MS. BARTIROMO: Well, yeah. Bernanke-- Bernanke is out there saying, look, we’re going to keep rates low for a long time…

GREGORY: So…

MS. BARTIROMO: …but as soon as people figure out we have a credit problem, rates move higher and our interest expense goes much higher.

GREGORY: You know, I talked to Steve Case this week, former-- you know, founder of AOL and so forth about America’s place in the world. And it does factor in in terms of what America is actually capable of doing and around the prospect of meaningful debt reduction, which I don’t really see happening this year.

MS. BARTIROMO: No, you’re right, you’re right.

GREGORY: It seems may be we chip away at it-- but here is what Steve Case said.

(Videotape)

MR. STEVE CASE (Co-Founder, America Online (AOL)): It’s not helpful to the economy. It’s not helpful in terms of building confidence, not just about business in this country but people all around the world. We have a global marketplace, global investment. People are sort of puzzled that the United States is-- is not able to deal with-- with some of these issues. So there’re some near term, you know, challenges that need to be dealt with. But the broader issue is trying to figure out some process so the work of the nation get-- get done in a more responsible, disciplined kind of way.

GREGORY: So Steve, I mean, part of the-- the-- the-- the politics on this is-- for the president as the chief executive to make that case to the American people and say, you know, if only Congress could do its job…

MR. INSKEEP: Yeah.

GREGORY: …we can come to some sort of deal here. But, of course, Boehner doesn’t want to negotiate to the White House right now over this.

MR. INSKEEP: Well, Boehner doesn’t want to appear to negotiate…

GREGORY: Yeah.

MR. INSKEEP: …with the White House. I’m going to keep in my mind separate what people are willing to do substantively with how they arrange the politics. That’s one of the reasons that people have talked about a grand bargain. They still talk in terms of combining some of these major deadlines together when I talk with-- with members of Congress and with people on their staffs. But the political challenge is tremendous for both sides. The-- the president feels that he’s in a strong position. House Republicans feel that they’re being backed into a corner again and again. They, I think, are willing to put more revenues on the table but only at the right time when it does not massively damage them with their political bait.

GREGORY: And that’s interesting to me, though, I think the White House ultimately comes around to doing something on Medicare if they think the conditions are right enough to make it part of a big deal and whether they’ve gotten some other things beforehand. The other piece of this that I've picked up talking to folks this week is do they try to get something on gun control, do they try to get immigration passed, do they make people feel a little better about Washington and then try to get this deal. We’ll pick this up on the other side of the break. I want to go to a break. But also it is Oscar Sunday. You used to get your stock picks from Mister Mad Money himself over here. But we’re going to get some Oscar picks from him. We’re also going to talk about a new formula that Nate Silver of all people has come with up with to see who’s going to win best picture so you don’t even have to watch. Much more with our roundtable. Watch the Oscars though. You're going to watch more when we come back after this break and with more with our roundtable after this.

(Announcements)

GREGORY: That was Jimmy Fallon and that was the First Lady. We can talk about fiscal austerity or we can talk about the evolution of the mom dance because that’s what they were doing there. I like this. Harold taught me the-- the different reel in, you know, which I try to pass on to my kids. But that’s what they were doing in that. That was fun. I want to talk politics for-- for just a second, Harold Ford, if you can regain your composure. You heard Bob-- Bobby Jindal talking about-- he’s clearly positioning himself to run. And yet, look at a couple of the recent polls. You look at the head to head as Hillary Clinton is still sort of the person to beat on-- on the Democratic side. Head to head with Governor Christie, you look at that 49 to 45. How do you see these early-- these early readings so far?

REP. FORD: It’s just-- they are fun to talk about. Hillary Clinton makes it easier, I think for Republicans, for this reason. It makes it harder for unserious candidates to emerge.

GREGORY: This is among New Jersey voters I should point out that poll. Yeah.

REP. FORD: Right. But you-- you hear the voices of Jindal, Christie, McDonnell, Jeb Bush as opposed to voices of Santorum and Palin, and others. So the more you have a serious-- I don’t mean to leave anybody, Paul Ryan, Marco Rubio…

GREGORY: Yeah.

REP. FORD: …would be part of that conversation as well. Bobby sounds like he’s running. I serve with him…

GREGORY: Yeah.

REP. FORD: …in Congress, I like him, I respect him, I don’t agree with him on-- on a lot of things. But his voice is ones you have the content with seriously as opposed to some of the other…

GREGORY: Yeah.

REP. FORD: …folks on the fringes.

GREGORY: What do you see, Peggy?

MS. NOONAN: I-- I see an opening for a candidate down the road who does the opposite of what Washington is doing now. Washington now is like a suffering marathon. Which kind of suffering do you want the most, cuts, tax increases, FAA flight controllers leave, it’s all about suffering. Someone coming forward and saying, no, actually, it’s all about growth. We can get dynamism back in our country again, not only through the reforms everybody here is mentioning. But Harold said, this energy revolution that we are on the brink of and-- and not grasping and making real could help turn the entire economy around. I mean it’s so amazing that good stuff could happen…

GREGORY: We’re going down a road of-- of substance here which I want to pull us back from because I want to make sure that we spend a couple of minutes on the Oscars. But before I do that, the other big picture of the day, of course this is the-- the pope’s final mass-- not mass but the-- the prayers that he’s offering today for the final time at the Vatican. Incredible picture this morning as you look at the crowd. Peggy, you’re also following this closely as we get closer to a conclave in the selection of a new pope and also lingering scandal over sexual abuse, which is part of the conversation as well. What do you see right now?

MS. NOONAN: Oh, it’s-- this is so interesting to me. We have never in 6 or 800 years have a moment-- had-- had a moment like this. People keep saying to me, what do you think, the conclave will do? What will the cardinal-- College of Cardinals do? And I say not only do I not know, of course, but they don’t know. We’re in some kind of new territory here with the papacy. They’ve had more time to think about what they want and without an overlay of mourning for the last guy, if you will to…

GREGORY: Right.

MS. NOONAN: …to help direct their thoughts. On the scandals, I sure hope that Cardinal Mahony of Los Angeles, Roger Mahony, who has been involved in-- in this very recently documented horrible, horrible long-term scandal while he was cardinal in Los Angeles, I think it would be wonderful to see a cardinal of the church show humility and modesty and self-sacrifice and not go and bring the overlay of that scandal with him.

GREGORY: Let us switch gears and talk about what a lot of people will be focusing on tonight that is the Oscars. So here are the-- the best picture nominees. And only in MEET THE PRESS style could we look for a way to inject politics into this. But thankfully, Nate Silver of The New York Times, and his blog has been coming up with a way to predict the outcome tonight. And here’s what he writes. “Zero Dark Thirty,” he says, “may have won slightly more critical acclaim but the critics do not vote for the Oscars, the insiders do,” Harold. “And there has been absolute consensus for "Argo" among the insiders. It would be an enormous upset if it were to lose. “Lincoln," once considered to be the front-runner, has been nominated for almost every best picture award but won none of them. Counting on a comeback would be a bit like expecting Rudolph Giuliani to have resurrected his campaign in Florida in 2008 after finishing in sixth place everywhere else.” Harold, just a minute. Maria, you first. What do you-- what do you make of that?

MS. BARTIROMO: …also a-- a-- a great one. I don’t know. I think Lincoln has done so much acclaim. I-- I thought Argo, I-- I-- I-- I think it probably has great teeth and it’s already winning so many awards. I-- I don’t know. I didn't see Argo but I thought-- I thought Lincoln is…

GREGORY: But the model, Steve, is it somehow the insiders are the one who mattered? Don’t pay attention to what the critics think. It’s these insider picks. That’s what Nate Silver is saying.

MR. INSKEEP: Well, he-- he’s looking at the voters and I don’t know. Nate silver is a smart guy. But just-- just-- I mean, you’re always biased in favor of the movie you like better. And I like Lincoln better. So I’m-- I’m happy to lean that way. Argo, I was a little bothered by the end even though it’s an awesome movie, so...

GREGORY: Because it was not-- but see, this is a big issue because it didn’t happen.

MR. INSKEEP: Well, yeah. Because-- yeah…

(Cross talk)

GREGORY: Right. Because that didn’t actually happen.

MR. INSKEEP: Didn’t quite happen. I-- I don’t know that didn’t happen. It just seemed a little overdramatized. But now I’m becoming a theater critic. You know, I mean, Lincoln-- Lincoln, whether it wins the Academy Award or not, I think is the-- the movie that has ended up resonating more in this moment in time, in this moment in history. It’s perhaps the more significant movie for that reason, even though Argo on the whole…

GREGORY: If you’ve got historical drama essentially and then you’ve got gaps in what was true and what was not. I guess it’s interesting because so many Americans are actually getting a sense of this history really through the drama, that’s true of Zero Dark Thirty and-- and Lincoln and Argo.

MR. CRAMER: And-- and true of Silver Linings Playbook because the Eagles did beat the Cowboys, I’m the season ticket owner for the Eagles. This-- this is like everybody from Philadelphia-- my father and I have had the exact same relationship that Cooper had with De Niro.

GREGORY: Yeah.

MR. CRAMER: I think Lincoln wins for exactly what we’re talking about, though which is…

MR. CRAMER: I think Lincoln get-- I know what I want. What I want is Silver Linings. But Lincoln gets it, I think, because people are saying I hate Washington, let’s vote for the original Washington--a Republican who managed to be able to get everybody together.

GREGORY: Any-- Harold, any surprises here. You pointed out that Nate Silver didn’t get the Super Bowl right.

REP. FORD: Yeah. No, no. I mean, Nate is smart. So I mean, I-- I trust him on this. I-- I think he’s right about Argo. I think Daniel Day-Lewis wins best actor, I think Jennifer Lawrence best actress. I think Les Misérables’, Hathaway and I think-- I hope Robert De Niro wins because I wouldn’t be…

(Cross talk)

GREGORY: Wouldn’t that be nice if Robert De Niro wins?

MR. CRAMER: Yes, it would.

MS. NOONAN: Yeah, it would. I think that someone said this morning it would be the first time he’s won an Academy Award in thirty years since…

MS. NOONAN: …of a professional lifetime in this 30 years. Good fellas.

GREGORY: Right.

MS. BARTIROMO: Yeah.

MS. NOONAN: Wow.

GREGORY: Okay. We’re going to break down visual effects here in just a minute. We’ll take a break. We’ll be right back.

(Announcements)

GREGORY: While there is still debate again, I made it shorts here. Thank you all very much for the discussion. I appreciate it. That is all for today. We’ll be back next week. If it’s Sunday, it’s MEET THE PRESS.